Published report says telecom giant is working on offer to merge with its rival in $20B deal.

T-Mobile US shares surged nearly 9% in late trading Friday on rumors that its wireless network rival Sprint is preparing a bid for it that might be worth more than $20 billion.

Several minutes after the 4 p.m. ET market close, The Wall Street Journal published a story on its website about the possible bid, citing unnamed sources familiar with the matter.

A deal isn't likely to be finalized anytime soon. Sprint, which was recently acquired by Japanese wireless carrier Softbank, will have to assess antitrust issues before proposing any deal and won't submit a bid until the first half of next year, the Journal report said.

T-Mobile is currently valued at about $21.4 billion after the stock's price surge to $27.64 Friday. Sprint shares jumped 3.4% on the news at the market close and gained another 3.7% to $8.74 in after-hours trading.

A Sprint acquisition of T-Mobile would create a more fortified competitor to the current market leaders -- Verizon Wireless and AT&T -- as consumer demand for faster and cheaper wireless Internet grows unabated. Sprint declined comment on the report, and T-Mobile did not respond to a request for a comment.

The two players separately are investing in what is currently the fastest data network technology available, called "LTE." A merger would allow them to save money and unify their standards.

A marriage of the telecom companies could also lead to more reliable data networks and competitive pricing that would be appealing to customers, as well as improve pricing leverage against phone and device makers.

But Sprint and T-Mobile would have to convince the Federal Communications Commission that the deal wouldn't hurt consumers by leading to higher prices. With the limited amount of U.S. wireless airwaves, or spectrum, available to carriers, the FCC wants to retain as many competitors as possible and in 2011 quashed AT&T's attempt to buy T-Mobile, when that company was worth nearly double what it's valued at currently.

Sprint, which is losing customers, will argue that consumers are better served having three strong competitors rather than a market of two strong and two weak players, says Chetan Sharma, an independent wireless industry analyst in Seattle. The two companies would have about 53 million contract subscribers combined -- but still trail Verizon Wireless and AT&T in total number of customers.

T-Mobile, which is controlled by Germany's Deutsche Telekom, has gained customers in recent months following a new marketing campaign that allows customers to forgo annual service contracts. Still, it hasn't been able to overtake its three larger rivals, and Deutsche Telekom is open about wanting to exit the hyper-competitive U.S. market.

Even with Sprint's financial support from its new parent, Softbank, the pairing of the third- and fourth-largest U.S. wireless carriers would trigger operational and technological challenges. Consumer confusion stemming from various brands that the two companies currently market -- including Boost and Virgin Mobile for Sprint and MetroPCS for T-Mobile -- is inevitable, says Carrie MacGillivray, a mobile analyst at research firm IDC.

And even though they're both investing in LTE, their data networks operate on different standards that would have to be reconciled for consistent, reliable coverage, she says. "It'd be a fairly arduous process," she says.

Sharma predicts regulators would ultimately approve the merger given the financial need for a "strong third player ... It makes sense for them to combine, and I've said before that it's a matter of time." .